Capital Appreciation Fund

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DEFINITION of 'Capital Appreciation Fund'

A mutual fund that attempts to increase asset value primarily through investments in growth stocks. The heavy investment in growth stocks increases the risk associated with these types of funds.

Also called "aggressive growth fund".

INVESTOPEDIA EXPLAINS 'Capital Appreciation Fund'

As its name suggests, a capital appreciation fund seeks to deliver value to shareholders by investing in companies with appreciating share prices.

This type of fund is the exact opposite of an income or dividend fund, which focuses on investing in companies that pay shareholders a dividend. In addition to risk tolerance, something else to consider when analyzing these different types of funds is the fact that capital gains are usually taxed lower than interest income.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Depreciation

    1. A method of allocating the cost of a tangible asset over its ...
  3. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  4. Risk Tolerance

    The degree of variability in investment returns that an individual ...
  5. Aggressive Growth Fund

    A mutual fund that attempts to achieve the highest capital gains. ...
  6. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
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